The UK housing market has started 2025 on a positive note, with house prices rising to a new record high despite ongoing economic pressures. According to the latest Halifax House Price Index, property prices increased by 0.7% in January, recovering from a slight dip in December. This brings the average UK house price to a record-breaking £299,138.
The Landlord Insurance team at Lansdown have summarised the significant changes and what they mean for property owners.
Annual and Regional Trends
While monthly growth was positive, annual growth slowed to 3.0%, down from 3.4% in December. The pace of growth varies across the UK, with some regions showing stronger resilience than others:
- Northern Ireland continues to lead with the highest annual price growth at 5.9%, although this marks a decline from December’s 7.3%.
- Wales saw property prices rise by 3.6% year-on-year, reaching an average of £227,397.
- Scotland recorded a more modest increase of 2.4%, with average property prices at £210,690.
- England’s North East has now overtaken the North West as the region with the strongest annual growth at 5.2%, with average property values at £178,696.
- London remains the most expensive region, with an average house price of £548,288, up 2.8% from the previous year.
Market Influences and Outlook
Several factors are shaping the housing market’s trajectory:
- Improved affordability: Household earnings are expected to continue outpacing inflation, which may ease financial pressures for buyers.
- Mortgage market activity: Demand for mortgages remains strong, with approvals up 0.7% in December, according to the Bank of England.
- Interest rates stabilising: Mortgage rates are expected to stay within the 4%-5% range throughout 2025 as buyers adjust to the new normal.
- Supply challenges: A persistent shortage of available housing stock continues to underpin price growth despite affordability concerns.
What This Means for Landlords and Property Owners
For landlords and property investors, the continued rise in property values presents both opportunities and challenges. Higher house prices may increase asset values but also influence affordability for new investors. Meanwhile, with rental demand remaining high, landlords should stay informed about market trends and potential regulatory changes in 2025.
This article is for informational purposes only and should not be considered legal advice.
About Lansdown Insurance Brokers
Lansdown Insurance Brokers are specialists in Landlord Insurance and Block of Flats Insurance. We can provide flexible policies to suit individual client needs. Whether you’re a landlord, letting agent, or property owner call the team on 01242 524498 or email enquiries@lansdowninsurance.com.
Lansdown is part of the Benefact Group, a charity-owned, international family of financial services companies that gives all available profits to charity and good causes.